Kitimat methanol plant future hinges on cheaper gas price By MALCOLM BAXTER methanol plant may have many things going for it, but they mean nothing if it can’t get a reduction in the rate Pacific Northern Gas © charges for transporting gas to-the facility, That was message Methanex CEO Pierre Choquette delivered .- when the B.C. Utilities Commission held hearings into PNG’s rate increase applications here. of testimony, Choquette described the Kitimat fa- cility as “blessed” when it came to the location given its proximity to both west- ern North America and Pa- cific Rim customers. He also noted the plant had reduced its costs by 20 per cent and had seen ca- pital expenditure to im- prove its, performance, especially in meeting en- vironment ministry regula- tions. The methanol facility has been closed since Last July because of high operating costs. Choquette described. the company’s goal as making Kitimat “the very best..in North America,” and not compete against other plants throughout the world - ¢ither Methanex’s or anyone else's — that had access to cheap gas, Choquette emphasized that Methanex did not ex- pect the same return from each of its facilities but did require that they “carry their own weight” — in other words be able to break even at the bottom’ of the methanol price cycle. What did that mean in the case of Kitimat? Cautioning he was using “ballpark numbers”, Choquette said a shut down plant was costing the” ‘-company.= about uS$20" ' i “million a’year. Given current methanol prices and US$5 per giga- joule gas, those losses would be halved. If it could: get the trans- portation rate it wants from - PNG - 32 cents per giga- joule or about one third of what it had been paying -— the losses would drop to US$5 million per year. Throw in the package negotiated with the Job Protection Commissioner, and the Kitimat operation would be close to break even. Given the current and projected supply and de- mand situation, Chaquette predicted methanol prices would stay. where they Police chase drivers phone cails from the pub-. lic. concerned about the safely of children in school zones. The, complaints include drivers who speed, fail to stop at stop signs and dri- vets who are not yielding to pedestrians. The Terrace RCMP will be increasing patrals in all 13 school zones in Terrace and Thornhil] from, March . 24 to April 2, 2001. Drivers are reminded to observe the 30km/hr school zone signs. Tickets for speeding will be issued and the. penaltics range from $173-$460, say po- lice. ; Police are alsa remind- ing the public to observe the crossing guards at var- ious school crossings as well, G a) | www.parlicipaction.com the basic |, were for the next few ‘, years. METHANEX’s Kitimat . He also predicted US ~Gulf gas prices would ease — although he admitted there were those who dis- agreed with his assess- ment. * Later in his testimony ~he also confirmed that if it could get the rate it- is Seeking from PNG plus “reasonable” gas and me- ;:thanol prices, the Kitimat “plant could be fired up without the company hav- - ing reached an agreement During his three hours ” with the provincial govern- ment on royalty and tax breaks. However, it would still be seeking thase. On the other side of the coin, if the BCUC was to allow PNG to charge the . same or higher rates, Cho- » quette said the company would honour its abliga- tions — the 80 per cent ta- ke-or-pay clauses in its contracts - but concentrate on “finding alternative so- lutions”. Several times during his testimony he put heavy emphasis on the word “now” in terms of the'tim- ing for agreement ona re- duced PNG charge. Following the adjourn-— ment of the hearing, Cho- quette thought he had been able to make “good points” in terms of the need to continue working on reducing costs for the ~ Kitimat plant. As for its chances of re- opening, he said “If we can find a resolution here to get a lower tariff...and looking at what the metha- nol market looks like over the next period, I think the chances are very goad.” Given he had indicated the plant would be losing half as much if it was run- ning now, Choquette was asked why he didn’t fire it up tomorrow ‘and save some money. “It would really gét in the way of what we’re try- ing to do here,” he ex- plained. I'd like to have more certainty about the costs poing forward. Restarting just to shut down six months later also made no sense. “Why do that?” BCUC is expected to deliver its decision by month’s end. The Terrace Standard, Wednesday, March 28, 2001 - Al] m Senseless destruction VANDALS appear to have destroyed the Terrace Public Library's lawn sign. 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